Tuesday, 4 July 2017

The link between passing off & provenance - Guest Post

Afro-Corne is delighted to receive this handy synopsis on recent case law on passing off from the desks of Darren Margo and Natalie Hill of Margo Attorneys. In this post the authors pick up on the recent Supreme Court of Appeal judgment in South Africa in Herbal Zone v Infitech Technologies which covers that situation where an ex distributor turns competitor, and what is then required to stop that business selling products bearing the same name. It is also a reminder on the importance of registering a trade mark. Read on:
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Natalie Hill

There have been a number of cases recently dealing with “passing off”,
being Global
Vitality v Enzyme Process Africa (2015), Pioneer Foods v
Bothaville Milling (2014) and Herbal Zone v Infitech
Technologies (2017). In each of these cases, the court has dealt with the
requirements that need to be satisfied in establishing a successful claim of
passing off. These remain unchanged in the latest series of 3 judgments: the
successful applicant must show that he has a reputation in the goods and/or
services, that the Respondent has misrepresented to the public that its goods
and/or services are the same as those of the Applicant and that due to this
misrepresentation, the Applicant has suffered damages.

In both the Enzyme and Pioneer Foods cases, the court found that the
Appellants had sufficiently proved that they had a reputation in their various
products. However, in the Herbal Zone case before the Supreme Court of Appeal
(SCA), the Appellant was not successful – it is an interesting exercise to
explore why. To be frank, however, the Herbal Zone judgment was coloured more
by the paucity of evidence than it was by any issue relevant to passing off –
but where that judgment does present something new and interesting is in the
issue of provenance, as we explore below.

In the Herbal Zone case, two issues were dealt with, namely passing off
and defamation. For purposes of this article we will deal only with the matter
of passing off. In a nutshell, the Appellant argued that the Respondent was
guilty of passing off its product PHYTO ANDRO FOR HIM – a herbal supplement.
The Respondent had originally been a distributor for the Appellant of the
product in question, but this relationship came to an end in 2014 whereupon the
Respondent decided to import and distribute a similar product itself and market
it under the same name. The evidence that was led by the Appellant created some
confusion as to which company held the rights and goodwill in the product.
Several players were involved in a confusing, veritable rabbit warren of
intersecting rights and allegations. To complicate matters further, neither of
the parties had attempted to register the trade mark PHYTO ANDRO FOR HIM before
this matter went to court. It appears that only once the relationship had
soured between the parties did they both attempt to register the trade mark.
[This issue, of which party can lay claim validly to the trade mark, now lies
before the Trade Marks Office Tribunal]. Before the SCA, neither party could
lay claim to the reputation vested in the trade mark because neither party had
proprietorship of the trade mark. As a result, the court then had to look at
the issue of provenance. In other words, which company is the primary source of
the products in question?

This was the second critical issue that had to be dealt with by the SCA.
It deduced from the evidence that the goodwill in the product vested in Herbal
Zone International as this company is ultimately where the product originated.
To summarise the detail: while one of the Appellants was able to demonstrate
that he was the proprietor of another of the Appellants, he could not
demonstrate, on the evidence, that the Appellants had built-up goodwill and a
reputation in the product. Accordingly, the first hurdle to proving passing off
could not be overcome – and the matter ended there.

The important element to be crystallised from the Herbal Zone judgement
is how the courts may rely on the issue of provenance when deciding on the
matter of reputation. This places tremendous pressure on the Applicant, if it
does not have proprietorship of the trade mark relating to the goods and/or
services in question, to show that it has a clear and direct link to those
goods and/or services by way of being the source or origin of those goods
and/or services. Finally, on this point, it was very interesting to note that
the SCA cited, with approval, the view expressed by Webster & Page that, in
some circumstances, a person who is not the proprietor of certain goods can
still acquire a reputation as indicating that they emanate from him: in which
case the goodwill adhering to that name or get-up will vest in him (typically:
a distributor of those goods).

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